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The staking ratio for Ethereum is about 14%, while it averages 60% for the other main PoS blockchains.
According to a study released by JPMorgan (JPM) on Wednesday, the mid-March Ethereum Shanghai update will increase the blockchain’s staking ratio over the medium run.
The average for other proof-of-stake (PoS) networks is nearly four times as high, according to the bank, so there is plenty of room for the 14% ratio to increase.
The validator count might rise from 0.5 million to 2.2 million and the yield would drop from 7.4% current to about 5%, according to analysts led by Nikolaos Panigirtzoglou. This is predicated on the staking ratio becoming convergent to the 60% average of other large PoS networks. Validators confirm that a block is accurate and can be added to the blockchain in a proof-of-stake system.
The bank predicted that a significant amount of future growth in staking will switch to liquid staking methods like Lido. By offering an equal amount of tradable derivative token in return for staked ether, these methods “allow liquidity for staked assets, which would otherwise be locked in the staking contracts.”
JPMorgan observes that while liquid staking protocol derivative token prices have typically traded below those of their underlying assets, they are now approaching parity with ether as the Shanghai upgrade draws closer (ETH).
It might be argued that as the upgrade date nears, the usefulness of these liquid staking procedures will decrease. The letter claimed the argument against it is that the benefit of these protocols goes beyond only supplying liquidity and also includes acting as a middleman for small-scale investors who would otherwise have to overcome a threshold of 32 ETH ($52,000) for staking.
Liquid staking methods have thus emerged as crucial DeFi players, raising worries about network centralization, the note continued.
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